A NATION CHALLENGED: THE COST; Bayer Agrees to Charge Government a Lower Price for Anthrax Medicine

Federal health officials and executives of Bayer A.G. reached an agreement today that would nearly halve the price that Bayer charges the government for its anthrax medicine, Cipro.

Bayer agreed to ship 100 million tablets of Cipro by the end of the year for 95 cents each, and to donate another 2 million tablets beginning next week. The government also obtained options to buy an additional 100 million tablets after this year at 85 cents each, and a further 100 million tablets for 75 cents apiece.

Tommy G. Thompson, the secretary of health and human services, sought to allay public and Congressional concerns about the price and availability of Cipro by emphasizing the deep discount and large shipments that Bayer promised. ''There is no need to hoard Cipro or other antibiotics -- the government has enough medicine,'' he said.

With corporate one-upmanship, Johnson & Johnson said tonight that it would ask the Food and Drug Administration to approve the use of its antibiotic Levaquin, which is similar to Cipro and already on the market, as a treatment for anthrax, and offered to donate 100 million tablets of Levaquin to the government.

Bayer also said that it wanted the F.D.A. to approve the use of its Avelox medicine to treat anthrax, while Bristol-Myers Squibb said that it had approached the F.D.A. last week to ask that its Tequin be prescribed after anthrax exposures, too. While it usually takes the F.D.A. months or years to broaden the list of ailments for which a medicine may be prescribed, the F.D.A. has said it will respond swiftly to bioterrorism.

Democratic critics of Mr. Thompson, some of whom have highlighted the Cipro issue as a way to press for tighter limits on pharmaceutical prices, welcomed the lower prices for government purchases but expressed lingering nervousness about the availability of Cipro. ''I'd feel more comfortable with more than one supplier,'' said Senator Charles E. Schumer, Democrat of New York.

Dr. Donald A. Henderson, a prominent expert on bioterrorism at Johns Hopkins University who is advising Mr. Thompson now, said that the Bayer contract would provide ample Cipro. All of the anthrax found so far can be readily treated by antibiotics like doxycycline, which are less expensive than Cipro and have fewer side effects, he said.

Mr. Schumer, who led criticisms of the price and availability of Cipro, also voiced disappointment that Bayer continued to charge pharmacies a wholesale price of $4.67 a tablet, which has driven the retail price to $5 to $7 a pill. ''They're giving the government a very good price,'' he said, ''but they're continuing to charge over $4 a pill to hospitals and pharmacies, and that's not right.''

Today's deal only covers government purchases. Until now, Bayer's price for government sales has been $1.83, with a 6-cent discount for bulk shipments.

Last week, Mr. Thompson had ruled out an effort to seek generic drugs, saying that it was important to protect the patent system. He changed course this week after Bayer's handling of Cipro sales became a national issue.

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On Tuesday, Mr. Thompson threatened to bypass Bayer's patent and buy generic alternatives instead. He even warned that he was ready to ask Congress for special legislation that would make the government exempt from paying any damages to Bayer for breaking the patent.

Helge H. Wehmeier, the chief executive and president of Bayer's American operations, said that the drug company had decided that it had to cut the price after watching criticisms of Mr. Thompson grow, especially from Congress, and after concluding that the United States faced unusual circumstances. ''These were tough negotiations but these are extraordinary times, and one cannot have a bookkeeping approach in these extraordinary times,'' he said.

Mr. Wehmeier said that the agreement today on price was quickly reached on Tuesday afternoon. But legal details took longer.

Wolfgang Plischke, vice president of Bayer's North American operations, said that the price of 95 cents would only be available to the American government. The Canadian government agreed on Monday to pay $1.30 a tablet.

Allan Rock, Canada's health minister, sent Bayer a curt note as the American deal came together today, saying, ''I want to underline my expectation that should such an arrangement materialize, the same terms and conditions must be made available to Canada.''

Federal regulators recommend that people exposed to anthrax take two Cipro tablets a day for five days and then switch to another antibiotic for 55 days.

Mr. Thompson said that Bayer would continuously manufacture and store Cipro for the government, and then periodically sell some of the antibiotic to the public while immediately replacing it with new Cipro.

In this way, the government will not have to spend large sums every three years to replace Cipro that is reaching the end of its shelf life. Mr. Plischke of Bayer said that the inventory would turn over fairly quickly so that the public would not receive old Cipro.